Running head: SHOPPERS DRUG MART ANALYSIS

Shoppers Drug Mart Analysis

Group A
Wanwisa Rucheekijnara

1682909

Ponpimon Sawatdang

1674977

Chi-Min-Hu

1681245

Ferg Lu

1682899

Zheng Ya

1684925

Harmeet kaur Sahota

1676852

Fairleigh Dickinson University

March 19, 2015

SHOPPERS DRUG MART ANALYSIS

Shoppers Drug Mart Analysis

Introduction
This study primarily focuses on analysing the structure of a well-known company based
in Canada in order to create a new solution for business development. Shoppers Drug Mart suits
the objective of the study because it has effective organizational structure and functional design
while still having opportunities for innovative products and services to offer to the market.
Shopper Drugs Mart was a drug store founded in Toronto in 1962 before becoming the
leader retail drug stores in Canada (Shoppers drug mart, 2012). It is now one of Canadas top 100
brands (Globe and mail, 2014), and it is well known for offering pharmacy products and services
provider. Shoppers Drug Mart, which has more than 1,253 branches across Canada nowadays,
provides various products, such as cosmetics, medicine, foods, magazines, health supplements,
and consultant service from experienced pharmacists. Besides, it has continued its business
expansion by creatively adding new product lines (The Star, 2014). In 2013, the Canadian largest
grocery retail company, Loblaw, merged with Shoppers Drug Mart successfully. The company
has more opportunities to reach the customer by offering wide range of product lines. Therefore,
analyzing the companys structure and functions will reveal its strength, weakness, opportunities,
and threat that need to be considered for finding the companys potential. After that the business
development plan can be efficiently regulated to make temporary success become the long-term
prosperity.
Organizational Structure
Many types of organization structure; functional, divisional, matrix, team, and network,
are studied widely. However, no company is using only one structure. Most companies describe

SHOPPERS DRUG MART ANALYSIS

combine these structure together in order to optimize and facilitate their requirement. Shopper
Drug Marts uses matrix and divisional structure and this is very clear to describe.
Shoppers Drug Mart has three primary structures, which are divided by function based
on products. The first structure is the central office which assists the licensed retail stores. The
second structure is retail stores; Murale, Shoppers Simply Pharmacy, and Shoppers Home Health
Care. Murale is not only the cosmetic brand owned by Shoppers Drug Mart but it is also the
holistic aesthetic service using the other luxury brands. The last structure is health care business
that operates MediSystem Technologies and Shoppers Drug Mart Specialty Health Network.
Obviously, the main products are retail stores including beauty centers, pharmaceuticals, and
medical equipment including support services.
Within the central office, many departments work together to support their licensed and
individual stores. Each department is responsible for various jobs. This operation encourages
anybody who wants to have their own business by Associate-Owner business model. The
pharmacy involves every subject about pharmaceutical including strategies. Marketing develops
the plans and supports marketing tools. Finance manages the investment, risk control, and tax
issues. HR concentrates on employee engagement as the first significance and improves working
skills. IT maintains the system to service customers across Canada. Also, central office is divided
into three branch offices based on geography; Shoppers Drug Mart central office in Toronto,
Pharmaprix central office in Montreal, and regional offices in Vancouver and Moncton.
Marketing Function
There are three strategies in generic strategies which are cost leadership, differentiation
and focus. According to Michael Porter (n.d.), the concept that the enterprise uses gives an

SHOPPERS DRUG MART ANALYSIS

advantage to its own rank position. Therefore, the success of Shoppers Drug Mart came from
using differentiation strategies.
Shoppers Drug Mart has been expanding from a small store in Toronto to a big chain
across Canada because of its effective differentiation strategies in its marketing system which
includes grocery stores, retail formats, special services, and its own brands. It offers several
product lines from food to household items. Recently, Shopper Drug Mart has added grocery
section to their store in some branches, in order to serve the Canadians shopping style of
stopping by the local store in their neighborhood. (Financial Post, 2015) and to increase income
by conveniently offering everything a customer could want.
The retail formats for pharmacy, which provides medicine and cosmetics, offer
customers fitness and safety. For the special services, Shoppers provides health care consultative,
medical and home-care equipment and pharmaceutical products and innovative services for
patients in long-term care facilities near the neighborhood. For their own brands, they commit to
provide customers satisfaction by giving them what they need.
In term of customers royalty, Shoppers build a good relationship with its customers and
achieves long time goals by cooperating with Royal Bank of Canada on royalty program named
Shoppers Optimum Card. There are more than 10 million members of this rewards program
continuing to be a strong focus for the company recently. Scherer et al. (2015) indicates that
developmental information technology has changed the model customers experience a service
encounter and their relationship with service providers. For example, every year, many new
customers apply the Shoppers Drug Mart members rewards card. When members use the
rewards cards, they could save more money and get more products information from Shoppers
Drug Mart. Then every day, the service center sends messages to the member that introduces

SHOPPERS DRUG MART ANALYSIS

some sales information about products coupons as well. The service center could select the
customers interested products list. The service does not only help the company to attract new
customers, but also it should hold more old customers. It must ensure modern products in its
marketing. Lund et al.(2014) showed that the service performance plays an important role in
driving sales profits in retail organizations, while retail merchant also rely heavily on direct
marketing to propel revenue growth. Shoppers Drug Mart improves products quality to help the
marketing competitiveness, since products quality is an important factor to affect customers
choices. Lake (2015) suggested marketer to keep asking themselves that why the customer
should buy their products or services over their competitors. In this case, Shoppers Drug Mart
used the customer services to find a right method and way to keep their customers.
Overall, the company does more than selling products. They want to build a business
relevance to develop themselves, such as customer services. Customer service brings more
benefits and profits for the company. According to Lake (2015), marketing brings a customer in,
and customer service keeps them coming back.
Operational Function
The operational function brings together the natural resources with the production
process to make products that customers need. Organizations operational function provides the
responsibilities and communications. Shoppers operational function helps everyone to
understand his or her role by showing the performance to achieve the organizations objectives. It
is also a key to the shoppers drug mart where a number of processes come together to make good
products and services to satisfy their customers.
For Shoppers Drug Mart, the accounting and finance department are responsible for all
the financial inputs and outputs. The marketing department thinks how they can do the marketing

SHOPPERS DRUG MART ANALYSIS

for their product and what should be the marketing value of their product. By the way, human
resource department also plays a vital role in this organization because they hire professional and
experienced people with their highly skilled vision, as well as their work experience.
All Shopperss managers, supervisors and operators come in marketing department.
They affect the customers by their excellent service. Managers organize and make plans to over
reach the expectation of external and internal customers. Shoppers Drug Mart has successfully
developed a strong structure. It observes the employees at the store level and the employees are
also satisfied and knowledgeable about the product for sale. The management explain to the staff
about their product and the marketing value of their products. The managers work to promote
benefits and improvement each year. Supervisors and operators work together to learn all aspects
of business. Therefore Shoppers Drug Mart does the departmentalization according to the
functions of accounting, finance, marketing and human resources.
Financial Function
Finance is the one capital aspect of organization and it includes balancing the
profitability and risks of corporation. Investment decision is also known as capital budgeting. It
is important to allocate capital in some long term assets to make profits in the future. Also, the
financial decision is another critical function managers must perform. Shoppers Drug Mart made
some critical financial decisions which show their sharp foresight on the market. It was exciting
when the two Canadian giant retail companies, Loblaw Companies Ltd. and Shoppers Drug Mart
Corp., combined in 2013. It was also a big chance for Shoppers to expand its market and increase
its finance opportunities. According to the CBC news, In a deal that the two companies say will
change the retail landscape in Canada, Loblaw has agreed to buy Shoppers Drug Mart for $12.4
billion (2013). In this case, the structure of the economics of Shoppers Drug Mart has been

SHOPPERS DRUG MART ANALYSIS

changed. Loblaw, the countrys largest supermarket company, will pay $61.54 a share for the
leading Canadian drug store chain..., the price represents a 29.4 per cent premium to
shareholders. (2013). With the significant change of market frame after the merger, Shoppers
Drug Mart has more opportunities on grocery retail and then improves in a healthy and balance
way. Besides the critical merger with Loblaw Company in 2013, Shoppers Drug Mart explored a
financial strategy to cooperate with Royal Bank of Canada insurance in the same year.
Customers could purchase the RBC travel insurance through the Shoppers Drug Marts website
and get the Shoppers optimum points. This was not the first time the combination between
Shoppers and RBC. Back to 2012, RBC and Shoppers made alliance with new Shoppers
optimum master card which offers the customers more convenience services and give them more
rewarding experience. Considering that there are over 10 million loyalty optimum card holders,
the RBC master card helps customers to build a more liable shopping experience in Shoppers. As
a Canadian drug company with a high reputation for reliability, Shoppers Drug Mart never
hesitates to explore new opportunities in financial area. These successful financial decisions also
reveal Shopperss activity to the society and the response to the public.
Conclusion
Shopper Drugs Mart is a successful company for being a convenience store that
provides neighbourhood quality products and services because of its proper management. Its
organization structure was well regulated so that they do not have significant problem relate to
the operation. Its standard in every store makes customer feels familiar and feel free to drop by
any stores. Moreover, the royalty program, optimums card, is simple, attractive, and effective. To
grow the company, Shopper Drugs Mart is one of the energetic companies that try to create new
products and services in order to expand its business all the time. By considering its strength,

SHOPPERS DRUG MART ANALYSIS

great opportunities are awaiting for it to own the greater percentage in market shares even though
it has to overcome many threats such as competitors and consumers preferences. As long as it
keep processing its business plan by adding up new solutions to offer all customers need, it can
beat its competitor and conquer the position of the Canadas leading convenience stores.

SHOPPERS DRUG MART ANALYSIS

9
References

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Financial Post. Retrieved from http://business.financialpost.com/2015/02/06/shoppersdrug-mart-prescription-for-food/
Brearton, S. (2014, February 27). Canada's Top 100 Brands. The Globe and Mail. Retrieved
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Griffin, D. (n.d). Organizational Structure & Its Functions. Retrieved from
http://smallbusiness.chron.com/organizational-structure-its-functions-3722.html
Kopun, F. (2014, August 22). Would you buy fresh groceries at Shoppers Drug Mart? The Star.
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